The ECB is preparing to dial back its monetary stimulus after years of ultra-low interest rates and massive bond purchases, paving the ground for rate hikes further down the line.

Padoan told a conference in Rome that the positive impact of higher interest rates, if this reflected a pick-up in inflation, should not be underestimated.

“Even if budget policy benefits from low rates, I would like to reiterate that Italy is totally prepared for an end to a low-rate environment. The end of QE does not frighten us. There are positive aspects to this that shouldn’t be played down,” he said.